What happens to the transformation curve between the goods

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Reference no: EM131505158

Question: In a two-good/two-factor economy with a fixed quantity of factors, what happens to the transformation curve between the goods if a tax is imposed on the use of one factor in the production of one good

(a) in a situation of perfectly competitive equilibrium in all markets in which there are no monopolies and no other taxes;

(b) in a situation in which the use of the other factor in the production of the same good is already taxed?

Reference no: EM131505158

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